1966 (8) TMI 19

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..... f the case, the Income-tax Appellate Tribunal was correct in holding that Rs. 75,000 being income from felling of trees from forests is not subject to income-tax?" The reference is at the instance of the Commissioner of Income-tax, Kerala, Ernakulam. The contention of the department is that the Tribunal was wrong in treating Rs. 75,000, the amount received by the assessee from his lessees for the felling of trees in his forest, as a capital and not as a revenue receipt. There is no doubt that the sale of trees, together with their roots, can be treated as a capital transaction. An authority for the proposition is the decision of the Bombay High Court in Commissioner of Income-tax v. N. T. Patwardhan. The question for determination is .....

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..... pecific meaning as far as such forests are concerned. Rule 7 of the rules provide that every permission granted for the cutting of trees under the clear felling, method shall be subject to the conditions mentioned in that rule. Condition (b) reads as follows : "All trees except casuarina shall be felled at a height not exceeding six inches from the ground, the bark being left intact on the stump and adhering to it all round the stump without being torn off or otherwise damaged. In the case of casuarina trees, the removal of the stump and root will also be permitted" ; and condition (e) : "The felled area shall be closed to grazing for a period of five years after felling." It is not contended by the assessee that Rs. 75,000 or an .....

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..... ent of the case should be confined to the materials available on the date of the order of the Tribunal. We reject this submission also. It has to be mentioned that, when the case came up before the Appellate Assistant Commissioner, in the first instance, it was remanded to the Income-tax Officer. In the remand report it is seen that these documents dated September 11, 1957, were produced by the assessee's learned counsel and, in his report regarding the receipt under clear felling, the Income-tax Officer had also made reference to these documents. It cannot be said that these are fresh materials." We make it clear that we have not placed any reliance on the extract from the lease deed given in paragraph 2 for coming to the conclusion that .....

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